Key Points
- Bitcoin and global equity indices experience an increase following the European Central Bank’s (ECB) decision to cut interest rates.
- Higher than expected U.S. jobless claims further boost Bitcoin and equity indices.
The ECB announced a reduction in interest rates, a move that was anticipated by many. Following this announcement, global equity indices and Bitcoin experienced a surge. This was further supported by U.S. jobless claims exceeding expectations.
ECB Interest Rate Cut
The ECB’s key rate was reduced to 3.75%, a decrease from the previous record high of 4%. This is the first time the ECB has made such a move since 2019. The decision was based on an updated assessment of inflation outlook, underlying inflation dynamics, and the strength of monetary policy transmission.
Response of Equity Indices and Bitcoin
Major European and UK equity indices were positively impacted. In London, the FTSE 100 saw a 28.45-point increase, while the regional Stoxx 600 index in Europe also experienced a rise. In New York, the Dow Jones Industrial Average, the S&P 500, and the NYSE Composite all saw increases in pre-market trading.
Bitcoin also moved in tandem with the buoyant equity markets. The largest digital asset by market cap saw an increase of around 1% and was trading at $71,065.
The ECB’s rate cut follows the Bank of Canada’s (BoC) decision to lower its policy rate to 4.75%. This marked Canada as the first G7 country to loosen monetary policy in the current cycle, a move now followed by the ECB.
U.S. Jobless Claims
In the U.S., new claims for unemployment benefits rose last week, exceeding economists’ expectations. This data is crucial for the U.S. Federal Reserve as it contemplates whether to begin cutting interest rates this year. The higher-than-expected numbers could signify potential stress in the labor market, which may influence the Federal Reserve’s rate policy.
